Zacks_Analysts' Blog : Titanium Repurchases Shares - Analyst Blog

Titanium Metals Corporation (TIE) announced that its Board of Directors recently authorized the repurchase of 400,000 shares of its common stock at an average price of $14.939 (exclusive of commissions).

Few days back, the Board also authorized the repurchase of 400,000 shares of its common stock at an average price of $14.6281 exclusive of commissions. The Board also authorized the repurchase of 100,000 shares of its common stock at an average price of $14.6644 and 251,627 shares of its common stock at an average price of $15.0778 both exclusive of commissions.

Last month, Titanium released its second quarter 2011 results. The company reported net earnings of $31.5 million or 18 cents per share in the second quarter of 2011, surpassing the Zacks Consensus Estimate of 16 cents and increasing from the prior-year earnings of $19.0 million or 11 cents per share.

Quarterly revenues of $272 million increased 28.3% year over year, beating the Zacks Consensus Estimate of $267 million. Increased sales were driven by a rise in sales volumes for both melted and mill products, primarily reflecting improved demand for titanium products in the commercial aerospace sector. 

Cost of sales jumped 22.1% over the prior-year quarter to $209.1 million. As a percentage of sales, costs plunged 76.9% in the reported quarter from 80.8% in the year-ago quarter. For the second quarter of 2011, gross profit was $62.9 million compared with $40.8 million in the second quarter of 2010, reflecting higher sales volume and the related efficiencies resulting from greater utilization of its manufacturing capacity, as demand continued to improve.

Titanium Metals faced increased demand in the industrial sector as infrastructure and chemical projects were reinvigorated by the global economic recovery. The company expects this trend to continue in 2011. The company also expects to drive efficiency through process technology and cost reduction initiatives.

Delaware-based Titanium Metals is the leading worldwide producer of titanium metal products.

Titanium Metals has been successful over the last several years in establishing significant flexibility and cost advantages in its entire manufacturing process. The company’s fiscal discipline and industry experience have allowed it to manage its production rates and costs effectively while investing capital conservatively and maintaining a strong, debt-free balance sheet. 

The company’s financial strength and operating flexibility position it to take advantage of opportunities to strengthen and expand its presence in key markets. The company competes with Allegheny Technologies Inc. (ATI) and RTI International Metals, Inc. (RTI).

We maintain our Neutral recommendation on Titanium. Currently, it holds a Zacks #3 Rank (Hold).